Me and my wife are young college grads (21-22). We both just became eligible for contributions to our 401K. Save on average 2K every month. We have a savings account with 25K+ and only debt is a recent car loan for 10K (we are planning on only having the loan for 1 year and then pay it all off. And if you are wondering why we did not pay all cash we wanted to "diversified" our credit showing an installment loan, probably foolish but oh well). We also have a brokerage account with ETrade (not a significant amount less than 5K) . My question is should we open an IRA account? If so, IRA or Roth IRA? who do you recommend? Is it ever to early to open an IRA type of account? If we do open the account should we just closed the savings account? Need some hand-holding.

Is further education on the horizon? Like a masters or Ed.D or something like that? If so, definitely the traditional IRA, because you can convert the money in a low-income year to a Roth IRA when your tax bracket is even lower.

Being eligible for a 401k and in the 25% bracket, are you sure you are eligible for a tax deductible IRA? Would seem you would only have a Roth as an option. I am also assuming you are doing this IN ADDITION to maxing out your 401k correct?

I would advise maxing 401k contributions and HSA contributions (if eligible) and then open a Roth IRA for you and the spouse. Roth IRAs have multiple advantages including being available as a second tier of emergency funds (contributions only) and will not impact your ability to make backdoor Roth contributions once your joint income is too high.

I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.

Being eligible for a 401k and in the 25% bracket, are you sure you are eligible for a tax deductible IRA? Would seem you would only have a Roth as an option. I am also assuming you are doing this IN ADDITION to maxing out your 401k correct?

I would advise maxing 401k contributions and HSA contributions (if eligible) and then open a Roth IRA for you and the spouse. Roth IRAs have multiple advantages including being available as a second tier of emergency funds (contributions only) and will not impact your ability to make backdoor Roth contributions once your joint income is too high.

I just became eligible so I have not/will not maxed out my 401K for this year. I was considering increasing my contribution to 100% at least for the last two/three payroll cycles of the year (is it worth it)? Next year I will for sure work diligently to max out my 401K (wife will strive for the same). Another question is should I try to max out my 401K on the first half of the year? I read I could be missing on employer contribution for the other half of the year depending on how the matching contributions are calculated (lump sum vs every payroll contribution)

Regardless of where you decide to send your retirement money for the immediate future, I would open a Roth and make some token contribution now if you plan to use it for storing emergency funds at some point in the future. You can't withdraw contributions penalty-free until 4-5 years after your lifetime first contribution. That way, you reduce the number of years where you risk penalties for withdrawing emergency funds you stored there, should you ever need them.

Regardless of where you decide to send your retirement money for the immediate future, I would open a Roth and make some token contribution now if you plan to use it for storing emergency funds at some point in the future. You can't withdraw contributions penalty-free until 4-5 years after your lifetime first contribution. That way, you reduce the number of years where you risk penalties for withdrawing emergency funds you stored there, should you ever need them.

You are thinking of withdrawing COVERSIONS, the 5 year rule does not apply to withdrawing contributions. You can open a Roth IRA today and withdraw your contributions tomorrow tax and penalty free.....

I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.

Being eligible for a 401k and in the 25% bracket, are you sure you are eligible for a tax deductible IRA? Would seem you would only have a Roth as an option. I am also assuming you are doing this IN ADDITION to maxing out your 401k correct?

I would advise maxing 401k contributions and HSA contributions (if eligible) and then open a Roth IRA for you and the spouse. Roth IRAs have multiple advantages including being available as a second tier of emergency funds (contributions only) and will not impact your ability to make backdoor Roth contributions once your joint income is too high.

I just became eligible so I have not/will not maxed out my 401K for this year. I was considering increasing my contribution to 100% at least for the last two/three payroll cycles of the year (is it worth it)? Next year I will for sure work diligently to max out my 401K (wife will strive for the same). Another question is should I try to max out my 401K on the first half of the year? I read I could be missing on employer contribution for the other half of the year depending on how the matching contributions are calculated (lump sum vs every payroll contribution)

I would not worry about lump sum 401k contributions next year, just set it on autopilot and forget about it. Great idea to try and get as much in by the end of the year as possible! Also remember that you can fund your Roth IRA for 2017 up to the tax filing deadline (April 2018) if you need to.

I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.

Regardless of where you decide to send your retirement money for the immediate future, I would open a Roth and make some token contribution now if you plan to use it for storing emergency funds at some point in the future. You can't withdraw contributions penalty-free until 4-5 years after your lifetime first contribution. That way, you reduce the number of years where you risk penalties for withdrawing emergency funds you stored there, should you ever need them.

You are thinking of withdrawing CONVERSIONS, the 5 year rule does not apply to withdrawing contributions. You can open a Roth IRA today and withdraw your contributions tomorrow tax and penalty free.....

Oops, you're right. I misread the other 5-year rule: Qualified distributions of *earnings* are only penalty-free if the beneficiary's first-ever Roth contribution was at least 5 tax year previous... which would only matter to somebody who got a really late start on their Roth IRA, I guess.